I think of SEO as divided into 2 areas.
1) On-site Optimization
2) Off-site Optimization
Both are important.
On-site optimization is doing everything necessary to optimize the webpages. Off-site optimization is the Link Popularity, and Link Relevance, and anything else that is not a direct manipulation of the webpages. To see the power of off-site optimization, just Google the word “failure“. I’m sure George Bush isn’t optimizing for that term anywhere on the whitehouse website.
In my opinion, the Key Factors of SEO are:
1) Internal Linking Structure
2) Link Popularity and Link Relevance
3) Crawlability / Optimized Code
4) Content Relevance
Of course, this might seem to oversimplify SEO, when in reality each of these key factors can be expanded into much more detailed analysis.
Something to note, is that getting high rankings on the Search Engines in 2007 isn’t gonna happen just because someone optimizes their webpages. If this were 1999, then keyword stuffing, and meta tags would work. But that ain’t gonna cut it in the 21st century of SEO. Now, we need to look at Social Bookmarking sites, building quality content as linkbait, paid text link campaigns, AND on-site optimization.